Texas attorney general Ken Paxton has filed a new lawsuit against proxy advisory firm Glass Lewis, accusing it of misleading investors by saying its voting advice is objective while factoring ESG and DE&I issues into its analysis.
Filed in Collin County, Texas court, the complaint alleges that Glass Lewis violated the Texas Deceptive Trade Practices Act by promoting its recommendations as independent and impartial while allegedly letting political or social issues shape its voting advice. Paxton's office says investors should be told when proxy advice is based on non-financial factors rather than only economic analysis.
The lawsuit follows a similar case Paxton filed earlier this year against ISS and continues Texas' push to challenge proxy advisers' role in shareholder voting. Conservative lawmakers and state officials have increasingly claimed that proxy advisors use their influence to promote ESG and DE&I policies that clash with shareholder value, while proxy advisors say their recommendations are designed to protect investors' long-term interests.
The case comes as Glass Lewis and Texas are already fighting over Texas Senate Bill 2337. Signed in 2025, the law requires proxy advisers to disclose when voting recommendations are based fully or partly on non-financial factors, including ESG or DE&I issues, and to provide supporting financial analysis. Glass Lewis challenged the law in federal court, arguing it breaches the First Amendment by forcing speech and targeting particular viewpoints. A federal judge granted a preliminary injunction blocking the state from enforcing the law while the case continues.
In a LinkedIn post, the American Consumer and Investor Institute said: ‘That is not a technical regulatory violation. That is deception. Advertising independent advice while quietly pushing a private agenda is exactly the kind of conduct that consumer protection laws exist to address.’
Similarly Will Hild, executive director of Consumers’ Research, told The Center Square, a US watchdog on state and local governments: ‘Glass Lewis has spent years prioritizing racist DE&I quotas, climate activism and other outdated ESG policies while claiming to serve investors’ financial interests. This deception is not just financially reckless but also illegal and must be met with consequences.’
As an example, the lawsuit points to Glass Lewis' Benchmark Proxy Voting Guidelines, which state: ‘Companies face significant financial, legal and reputational risks resulting from poor environmental and social practices… in cases where the board or management neglected to take action on a pressing issue that could negatively impact shareholder value, we believe that shareholders should take the necessary action in order to effect changes that will safeguard their financial interests.’
The new lawsuit points to a shift in Texas' approach. Instead of focusing on disclosure rules under SB 2337, the attorney general is trying to hold Glass Lewis liable for what he says are deceptive business practices linked to the firm's claims of objectivity. Paxton has argued that proxy advisers ‘cannot claim to offer objective advice while secretly advancing a political agenda,’ while supporters of the case say more transparency is needed around how shareholder voting recommendations are produced.
The lawsuit adds to growing political and regulatory pressure on the proxy advisory industry, which has faced more criticism from Republican-led states and lawmakers over how far ESG and DE&I issues should influence corporate governance and fiduciary decisions.
Natalie Bannerman
Natalie is a former telecoms and infrastructure journalist, a role she held for nearly seven years. Before this, she worked in the B2C startup space, covering lifestyle, arts and culture reporting. As senior reporter for Governance Intelligence she...
